Unlike the 2013 “taper tantrum,” the market has already priced in a portion of the Federal Reserve reducing asset purchases with Treasuries’ early 2021 move, yet the effect may not be fully factored in. The next move higher in yields could occur during the taper, as dealers will need to reprice risk tolerance as their ability to offload risk to a captive buyer fades away. The Federal Reserve’s asset-purchase reductions may eventually cause a modest increase in Treasury yields, as the market adjusts to a new demand paradigm, with overseas bidders remaining important participants. The view that the Fed taper will begin in November has been solidified by Chairman Jerome Powell’s Jackson Hole speech.